Could the decrease in Belgian government debt-servicing costs offset increased age-related expenditure?
https://doi.org/10.3326/pse.43.3.1 | Published online: September 14, 2019 Figure 1
Global savings, investment and hypothetical real interest (in percent) Note: EU-7 real interest rate is the unweighted average of long-term real interest rates in Belgium, Denmark, France, Germany, Italy, the Netherlands and the UK. Countries were selected based on long-term data availability. Source: authors’ own configuration based on Bean et al. (2015, left); AMECO and IMF WEO (right). Figure 2
Gini coefficient of income inequality in the US and the OECD (average value of all OECD members) Source: author’s own configuration based on OECD data. Table 1
Selected European governments and their potential to save further on debt servicing costs
Figure 3
Belgian general government net debt interest payments (in percent of GDP) Figure 4
Weighted average fixed coupon on Belgian non-treasury bill debt maturing in the indicated years 2016-2030 (left hand side) and savings on coupon payments as a percentage of GDP under a no-interest-rate-change assumption, 2016-2030 Source: authors’ elaboration on Bloomberg and IMF WEO data. Figure 5
Historical and forecast aggregate savings on Belgian government net debt coupon payments, 2016-30 (percent of GDP) Source: authors’ own calculations based on Bloomberg data. Figure 6
Disaggregated changes in age-related expenditure in Belgium with base year 2013 as a percent of GDP, 2013-2030 Source: authors’ illustration based on data from the European Commission and the Belgian Federal Planning Bureau. Figure A1
Annual growth of CPI inflation in Belgium (in percent), 1986-2016 Data source: OECD. Figure A2
Belgian secondary market government bond yields (07/05/2017) and Belgian y-o-y CPI inflation (03/2017) (in percent) Note: all government issued bonds are currently below the Belgian CPI inflation rate (figure A2). Thus, virtually any newly issued bond decreases Belgian government debt in real terms. Source: OECD. Figure A3
Overall change in age-related expenditure by 2020 and 2030 in Belgium (base year 2013; in percent) Source: authors’ illustration based on data from the European Commission and Belgian FPB. Figure A4
Forecast annual savings on net debt coupon payments (in percent of GDP) Note: based on a hypothetical scenario that assumes an increase in the average yield of maturity debt in the secondary market from the current level to 1.5% in 2020. Source: authors’ own calculations based on Bloomberg data. Figure A5
Weighted average maturity of total Belgian government debt, in years Data source: ECB.
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September, 2019 III/2019 |
